Multifamily Demand in Reno Surges as Cap Rates Compress
Supply might be a small concern — but demand certainly isn't any longer in Reno, Nevada's multifamily sector.
Net absorption hit 474 units in the first quarter, representing a surge of 102.56 percent year-over-year, although down from the 695 units in the previous three months, according to a market report from Kidder Mathews.
Kidder attributes the demand to cap rates sliding from 6.2 percent in the 12 months prior to 5.2 percent.
Also, there was positive movement on vacancies, as the category dropped by 29 basis points to 2.66 percent. Additionally, average asking rents rose by 2.56 percent to $1,681.
That all came as even first-quarter deliveries skyrocketed by 179.92 percent to 1,007 units. To make matters sweeter, construction is slowing dramatically, down by 67.71 percent, at 1,171 units.
The one negative trend in the first three months of the year was that transactions slowed down considerably, going from seven trades at $132.25 million in the fourth quarter to five and $19.09 million in the first three months of the year. Almost all of the first quarter volume involved the sale of Roselake Apartments at 3050 Lakeside, which went for $11.80 million. Gorelick Investment Group V LLC made the second-largest buy, with its $2.76 million purchase in the Midtown Reno submarket.
But still, Kidder says Reno is rebounding as interest rates remain volatile.
"With solid fundamentals, multifamily remains the most preferred asset class in 2025," Kidder explained.
"The Reno multifamily market remains strong with economic development, increased rents, sustained occupancy and buyer engagement."
Source: GlobeSt/ALM